Tax Preparation Services – Should You Use One?

January 24, 2009

If the federal tax brackets are too much for you to handle you can always use tax prep software like TurboTax or TaxACT which will walk you through it, in some cases you can file for free

If you have a more complicated financial situation or just don’t want to mess with taxes at all, you can hire an accountant or tax preparation service to prepare your taxes for you.  If your tax situation is pretty basic, paying the money for a CPA can be overkill and you could consider a tax prep service like Jackson-Hewitt, H&R Block, or Liberty Tax.

You still have to gather the required tax forms and information but instead of filling out the tax return yourself, you take your documents to a tax preparation service and they do it for you.  Here are some of the things you’ll want to bring along if you hire a tax prep service:

Tax Preparation Documents

  • Social Security Card
  • Driver’s License
  • Last years federal and state tax returns
  • All W-2’s received
  • All 1099’s received
  • All 1098’s received
  • Moving expense receipts
  • Receipts for large purchases if itemizing your deductions
  • All company records including equipment receipts and inventory records
  • Alimony/Child Support records
  • Jury Duty Pay
  • Gambling/Prize Winnings
  • Receipts for charitable giving
  • Child Care, Adoption, and Education expenses (receipts for the expenses)

Tax Preparation Services

Below are some of the things the top tax prep companies list on their websites:

Jackson-Hewitt – Tax Interviews, ProFiler Software, Audit Assistance, Amended Returns (Find Local Office)

H&R Block – Electronic Filing, Tax Cut Software, Audit Assistance (Find Local Office)

Liberty Tax – Money back guarantee, Audit Assistance, Electronic Filin (Find Local Office)

Some people question whether the tax prep services have the customer’s best interest  in mind, there’s a recent Forbes story on some undercover tax prep work done by a taxpayer advocacy group.  Just remember you’re the one who ultimately signs your tax return so if something makes you uncomfortable, be sure to ask questions.

Tax Refund Loans

If you use a tax preparation serivce, be prepared for the topic of tax refund loans to come up.  They may suggest an immediate refund loan or putting the refund on one of their pre-paid debit cards.

I do not recommend any of these products. Just ask for direct deposit into your account. It should only take 8 to 14 days to receive the refund when you file electronically, and there is no reason why you need the refund immediately.

Never depend on a refund to pay for upcoming bills or expenses. Many people did this with the 2008 stimulus refund checks, and they got burned because the checks did not come when promised.

We’re dealing with the government here, they screw everything up. If you’re expected to receive a refund, don’t rely on it. When you do receive it, use it to pay down credit card debt, invest, or build up an emergency fund.

Evaluating Tax Prep Services

Personally, I have never used a professional tax service. I cannot say which is the best tax prep service, because every office is different, even within the same company.

Some of them may be great and others may be horrible, so do your homework before picking a tax preparation office near you. Ask friends, family and co-workers for a personal referral of an office or individual they have used in the past.

Good luck with those taxes!


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Erik Folgate is a husband and father living in Orlando who's been writing about money online for 6 years. Digging himself out of $20k of debt after college and his former experience in the insurance industry give him some useful insights into personal finance issues.

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10 Responses to Tax Preparation Services – Should You Use One?


    If your finances are relatively uncomplicated, it may be overkill to get a CPA. I do not own a house, and have only one source of income now (my full time job). A tax preparation software does my taxes beautifully (I use turbotax). When I have children, own a home, have secondary income etc. I think it will be best to find a good CPA.

  • the weakonomist

    there is a good argument for and against using tax prep services. I always thought I’d go to a CPA, but after THEY screwed up last year, I’m questioning it. I have to wait and get my stimulus check until this Spring. Though they will file for me for free this year, I’m thinking I might do it on my own next year.


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